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After two years of legal battles between Tesla and the Massachusetts State Automobile Dealers Association (MSADA), the Supreme Judicial Court allowed the electric car maker to continue selling cars directly to consumers out of its factory stores.
The MSADA argued that Tesla's unique business model violated state franchise laws and accused the company of unfair competition.
However, the high court said Monday that the laws apply only to automakers that already sell through independent franchise dealerships.
The idea was to protect independent dealers that buy their inventory from manufacturers and mark up prices to make a profit; they could be harmed by competition from manufacturer-owned dealerships selling the same makes, which presumably could offer lower prices by cutting out the middleman.
Since Tesla is a brand new player in the Massachusetts auto market, there are no franchisees that could be harmed by direct sales, the court ruled.
Tesla's win could pave the way for foreign automakers with no current presence in the state to enter the market and bypass the franchise dealer system.
Source: bostonglobe.com
The MSADA argued that Tesla's unique business model violated state franchise laws and accused the company of unfair competition.
However, the high court said Monday that the laws apply only to automakers that already sell through independent franchise dealerships.
The idea was to protect independent dealers that buy their inventory from manufacturers and mark up prices to make a profit; they could be harmed by competition from manufacturer-owned dealerships selling the same makes, which presumably could offer lower prices by cutting out the middleman.
Since Tesla is a brand new player in the Massachusetts auto market, there are no franchisees that could be harmed by direct sales, the court ruled.
Tesla's win could pave the way for foreign automakers with no current presence in the state to enter the market and bypass the franchise dealer system.
Source: bostonglobe.com